Share
Explore BrainMass

Walter Does It His Way

Address both of the scenarios listed below. Support your responses with appropriate cases, laws, and other relevant examples research and cite research, using APA guidelines.

Scenario 1: Walter Does It His Way
Jonathan operated a landscaping business as a sole proprietor. Jonathan's business picked up in the spring and summer, so he asked his friend Walter to help him. After doing some research, Walter determined that he could become an employee or act as an independent contractor. Walter was excited about the opportunity; however, he wanted to reach an agreement that would provide him the best tax benefits. How does an employee differ from an independent contractor? What status should Walter choose? Explain your reasoning.

Solution Preview

For the greatest tax advantages, Walter would want to become an employee. An employee is paid a salary and has federal taxes withheld from his pay. As a sole proprietor (SP), Walter is responsible for 100% of tax payments on his income without having withholding for federal taxes throughout the year. As a SP, he needs to pay taxes at the ordinary income rate less his qualified business ...

Solution Summary

Address both of the scenarios listed below. Support your responses with appropriate cases, laws, and other relevant examples research and cite research, using APA guidelines.

Scenario 1: Walter Does It His Way
Jonathan operated a landscaping business as a sole proprietor. Jonathan's business picked up in the spring and summer, so he asked his friend Walter to help him. After doing some research, Walter determined that he could become an employee or act as an independent contractor. Walter was excited about the opportunity; however, he wanted to reach an agreement that would provide him the best tax benefits. How does an employee differ from an independent contractor? What status should Walter choose? Explain your reasoning.

$2.19